Opposition to rebate cuts grows

The federal government’s plan to save $2 billion by cutting the private health insurance rebate for middle- to high-income households has hit another obstacle, with north Queensland independent
Bob Katter
adding his opposition to the changes.

It was also revealed yesterday that the government’s own health insurer, Medibank Private, is preparing for thousands of its members to abandon or downgrade their private insurance cover as a result of the changes.

Mr Katter said yesterday he would oppose the changes because of an exodus from the private health system to the already overburdened public system.

“I’m scared silly of people moving out of private health into the public health system, which is already collapsing in Queensland now," Mr Katter said. “We need to do what we can to ensure that people who can afford to stay in the private health system do so."

Medibank Private chief financial officer Michael Samuel told a Senate estimates hearing yesterday that the government-owned company’s internal modelling estimated 1 per cent of its 3.7 million members could drop their private health insurance as a result of the government’s less-generous rebate and another 2.5 per cent of members may downgrade their level of cover.

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Under the proposed changes, which have been defeated twice in the Senate, a family on $160,000 a year would have its rebate cut from 30 per cent to 20 per cent. The rebate would phase out altogether once household income reaches $248,000 a year.

Mr Samuel said Medibank Private was working on its products to offer more than health insurance in the hope policyholders who might think about giving up their cover would see more value in keeping it.

On Tuesday, Tasmanian independent
Andrew Wilkie
said he was not obliged to support measures carried forward from previous budgets and he would have difficulty supporting the means testing of the rebate.

Fellow independents
Tony Windsor
and Western Australia Nationals MP
Tony Crook
are expected to oppose the proposal while NSW independent
Robert Oakeshott
is yet to publicly commit to his position.

Although he was “open-minded", Mr Wilkie said he was yet to be convinced by the government that he should support means testing.

Health Minister
Nicola Roxon
is trying to convince Mr Wilkie and the other independents that the changes would have little impact on the majority of their electors.

“The government will, as with all legislation, work closely with the independents and the Greens to negotiate the passage of the Private Health Insurance rebate changes through the Parliament," a spokesperson from Ms Roxon’s office said.

“The government’s modelling has consistently shown that our proposed changes to private health insurance rebates will not have a significant negative effect upon private health insurance coverage, premiums, or demand on public hospitals."

The Gillard minority government needs the support of the Greens and at least two independents to pass its proposed legislation. It now seems to be very difficult for the government to secure the numbers to pass the reforms in their current form.